Have you ever wondered if that bank fee or overdraft charge from your bank was legal? If you tried to challenge your bank in a court of law, chances are you found out you had signed an arbitration agreement, which meant you could not settle the dispute in a court of law. Instead, you had to go through arbitration to accuse your bank of charging illegal fees or mismanaging your money.

If you choose to use arbitration, you have to cover all your legal fees yourself, which can quickly reach thousands of dollars. If you believe your bank has illegally taken funds out of your account, the chances are the amount they took was negligible. Three dollars for an overdraft fee may not seem like much, but for some people it can mean passing on a box of groceries. Even if it’s not much for the individual consumer, if the bank is improperly charging these types of fees to a large portion of its customers, it’s probably making a fortune illegally.

But arbitration doesn’t allow you to combine your claims with other potential plaintiffs into a class action. Instead, your stuck paying all the legal fees associated with trying to recover a few bucks. Most consumers decide it’s not worth it and drop the issue – which means the bank gets to continue collecting millions of dollars for doing nothing.

If your claim is larger and you do decide to pursue arbitration, you’re likely fighting a losing battle. Arbitrators are in business to make money, and although there are some arbitrators out there with a reputation for providing fair and unbiased rulings, arbitration agreements often give the company the right to choose the arbitrator. An arbitrator might be more inclined to rule in favor of the party that continues to bring them business, even if this bias is unconscious.

When fighting a legal battle against a corporation, your chances of success are slim, but even if you manage it, the company is not significantly affected. The ruling is kept private, which means there’s no incentive for the company to change its practices and no one to force them to do so. They’ll pay your relatively small claim and then continue reaping the benefits from the millions of other consumers they’re ripping off.

The Consumer Financial Protection Bureau has proposed a new rule that would prohibit arbitration agreements on bank accounts, credit cards, and other consumer loans. A 90-day public comment period is required before the new rule can go into effect, but it does not require congressional approval, which means it’s almost certain to go into effect in the next few months. If that happens, it will not apply to existing accounts, although consumers will be allowed to pay off their loans, close their accounts, and open new accounts that will be protected under the new rule.

Corporate advocates have long argued (and continue to argue) that arbitration benefits consumers just as much as it benefits companies, if not more so. They point to the fact that consumers receive larger payouts in arbitration than in class actions, but that evidence fails to note the millions of consumers who don’t pursue arbitration after their class actions have been blocked.

But by proposing this new rule, the Consumer Financial Protection Bureau is doing what it was set up to do and what corporations have no incentive to do: protect consumers.

Our Wheaton and St. Charles consumer and class action lawyers provide assistance in data breach, privacy violation, fair debt collection, consumer fraud and consumer rights cases including in Illinois and throughout the country. You can click here to see a description of the some of the many individual and class-action consumer cases our Chicago consumer lawyers have handled. A video of our lawsuit which helped ensure more fan friendly security at Wrigley Field can be found here. You can contact a Oak Brook, Naperville of Schaumburg consumer protection, class action attorney who can assist in consumer fraud, data-breach, consumer rip-off, lemon law, unfair debt collection, predatory lending, wage claims, unpaid overtime and other consumer, or consumer class action cases by filling out the contact form at the side of this blog or by clicking here. You can also call our toll free number at (877) 990-4990.